For many businesses, and particularly small businesses, the payment of invoices from vendors and/or other suppliers of services and/or products is a time consuming and critical task.
Currently, in order to process and/or pay vendor invoices a business must typically first determine what funds are available to make the payment. This process often involves checking balances of multiple accounts, either via “hard-copy” statements from one or more financial institutions, that are often dated and therefore inaccurate, or by logging onto one or more accounts via on-line banking sites associated with one or more financial institutions. In either case, in order to determine what funds are available to make payments, either the business owner, an employee of the business, or a third party agent of the business, must expend considerable time determining what funds are available for paying invoices.
In addition, in order determine what funds are available to make the payment, a business must further determine all payments that are in process, but not yet completed. This typically involves first determining all payments that are authorized, and for which the process of making the payments has started, but the actual check issuance, funds transfers, etc., have not taken place. In addition, payments already made but that are in transit, for instance checks that are in the mail or fund transfers that have not been recorded yet, must also be identified, tracked, and then taken into account. Once again, either the business owner, an employee of the business, or a third party agent of the business, must expend considerable time making these determinations to establish what funds are available for paying invoices.
Once a business has invested the time and energy to determine what funds are available to make payments, the business must then review all invoices from vendors and/or other suppliers to determine an order of payment to the vendors and/or other suppliers. For many businesses, this is a critical analysis. This is because many businesses, and particularly small businesses, must closely monitor their cash flow and therefore must often make decisions as to the priority of payments to vendors and/or other suppliers. In many cases, these cash flow issues dictate that payments to vendors and/or other suppliers be made as late as possible. In addition, in cases of larger businesses where perhaps cash flow is not as big an issue, it is still often in the businesses' best interest to pay vendor invoices as late as possible in order to collect interest on the funds as long as possible.
Despite the potential importance of the prioritization of payments to vendors and/or other suppliers, many businesses, and particularly small businesses, currently fail to prioritize payments to vendors and/or other suppliers at all, or they prioritize payments to vendors and/or other suppliers in an inconsistent manner, and often based on no discernable or consistent payment prioritization criteria. In short, in many cases, these often critical decisions regarding prioritization of payments to vendors and/or other suppliers are currently often made on an ad-hoc and uninformed basis, often with little or no discernible methodology or consistency.
In addition, in cases where a business does take the time to perform a careful analysis of prioritization of payments to vendors and/or other suppliers, this process is extremely time consuming and resource intensive. This is because, currently, prioritization of payments to vendors and/or other suppliers typically involves generating accounts payable reports and then comparing the accounts payable reports with the funds that were determined to be available for paying invoices as described above. Then, using current systems and methods, the analysis to determine prioritization of payments to vendors and/or other suppliers often involves one or more business owners, and/or one or more employees of the business, and/or one or more third party agents of the business, manually generating multiple hypothetical vendor payment plans, each including multiple hypothetical vendor payments. In this process, whenever a hypothetical payment to a given vendor and/or other supplier is proposed, a “mini-reconciliation” must be performed whereby the funds determined to be available for paying invoices must be updated to reflect the proposed payment. Currently, these mini-reconciliations must be performed for each hypothetical, or actual, payment made. Consequently, this part of the process is also often a time consuming and resource intensive process.
To further complicate matters, and add to the inefficiency of current methods and systems, even after significant resources are used to create the hypothetical vendor payment plans, the hypothetical vendor payment plans must then typically be reviewed by a higher authority within the business, such as an owner or a supervisor. Consequently, even more time and resources are used, and, often, this supervisory review results significant delays and often in major revisions and/or new hypothetical vendor payment plans being generated that must then again be reviewed by the higher authority. In addition, this process typically must be repeated on a regular basis, such as bi-weekly or monthly.
Finally, once a business has invested the considerable time and energy to: determine what funds are available to make payments; review all invoices from vendors and/or other suppliers; and to determine an order of payment to the vendors and/or other suppliers; the business must then typically generate paper checks, and mail/pay the postage for the paper checks. The business then typically treats the payment as having been made, and the payment money gone, despite the fact that the payment amount may still be shown as being present in the businesses bank account balance until the payment check actually clears.
In addition, due, in large part, to the emergence of numerous electronic payment methods, in many cases, multiple possible payment methods are available to a given business such as, but not limited to: online payment systems; electronic funds transfer systems; traditional paper/printed checks; credit accounts; etc. Since many businesses use two or more of these possible payment methods each payment cycle, the task of accurately determining what funds are available to make payments is even more difficult than it was in the past when virtually all payments where made by traditional paper/printed checks.
As discussed above, current methods and systems for payment of invoices from vendors and/or other suppliers of services and/or products are extremely time intensive and do not provide businesses the information and/or capability to make prioritization of payment decisions in an informed, methodical, and/or consistent manner.